Section 24(b) of the Income Tax Act allows homeowners to deduct interest paid on housing loans for purchasing, constructing, repairing, renewing, or reconstructing a residential property. It offers deductions up to ₹2 lakh for self-occupied properties and unlimited interest deduction for rented properties, subject to specific conditions.
For self-occupied properties, you can claim a tax deduction of up to Rs 2 lakh annually on the interest paid on your home loan under Section 24b. This Rs 2 lakh limit applies collectively to both self-occupied properties.
To claim deductions under Section 24B, several conditions must be met: The loan must be from a recognized financial institution, and documentation such as interest certificates is essential. The property must be residential, and the purpose of the loan must align with purchase, construction, repair, or reconstruction.
Tax Benefits under Section 24
Homeowners can claim a deduction on their home loan interest on self occupied property under Section 24 of the Income Tax Act. The deduction amount is up to Rs. 2 lakhs (or Rs. 1,50,000 for the previous financial year) if the owner or their family occupies the house property.
Who Can Claim Deductions Under Section 24? Individuals owning a residential property that generates rental income or is self-occupied are eligible to claim deductions under Section 24. Home loan deduction and HRA benefit, both can be claimed by the tax payer on satisfaction of a few conditions.
Common Mistakes While Claiming Section 24B
Filing a claim on loans from unapproved sources can lead to disallowance during assessment and may attract notices from the Income Tax Department. Another common error occurs when reporting interest without the proper certificates from banks or lenders.
No, mortgage interest isn't always 100% deductible; it's subject to limits and conditions, primarily that the loan must be for buying, building, or improving your main or second home, and you must itemize deductions, with current limits at $750,000 of debt ($375k if married filing separately) for loans after December 15, 2017, while older loans have a $1 million limit, and you can only deduct the interest portion, not principal.
Section 24 reduces the finance deductions landlords can claim on their tax return. This means that many landlords, particularly those who pay income tax at the higher or additional rate, have higher tax bills than before.
Allowable expenses include your basic office costs such as stationery and the bills you pay on your business phone. Travel costs and staff salaries are also included, as is the cost of a uniform or other appropriate clothing (for example, if you work in a skilled or manual trade).
You can claim a 30% tax deduction on the lowest net annual value of your property or its rental income. However, self-occupied housing properties cannot avail this deduction under Section 24 (a).
If you qualify for both Section 24 and Section 80EEA, you can claim benefits under both sections. First, exhaust your deductible limit under Section 24 (₹2 lakh), and then proceed to claim the additional benefits under Section 80EEA.
Fill in ITR Form: In the ITR form, there is a section for deductions under "Income from House Property." You need to enter the details of the interest paid under Section 24(b) here. Claim the Deduction: If you have a self-occupied property, claim up to ₹2 lakh in interest under Section 24(b).
Section 24(b) covers interest payments, while HRA under section 80C includes principal repayment. These deductions can be substantial, significantly reducing your overall tax liability. You can optimise your financial planning and achieve the maximum tax benefits by strategically combining HRA and home loan deductions.
Under Section 80C of the IT Act, you can claim tax deductions on the principal amount you repay to your lender. This deduction is also applicable to the registration and stamp duty charges of your home. The maximum housing loan tax exemption under Section 80C is Rs. 1.5 lakhs in a financial year.
The combined maximum deduction allowed under Sections 80C, 80CCC, and 80CCD(1) is ₹1.5 lakh. However, you can claim an additional deduction of ₹50,000 under Section 80CCD(1B) for contributions made to the National Pension Scheme (NPS).
Home mortgage deduction limit
The mortgage interest deduction limit is $750,000, or $375,000 if you're married filing separately. This means you can deduct mortgage interest on the first $750,000 or $375,000 of debt, respectively. As such, many homeowners are able to deduct 100% of their mortgage interest.
You might be surprised to learn that simple business expenses like your cellphone bill or your new computer can be deducted from your taxable income. In fact, there are some fully-deductible expenses such as advertising and marketing costs, employee education and training, and certain legal fees.
Standard Deduction: 30% deduction on net rental income under Section 24(a) for maintenance, irrespective of actual expenses. Municipal Taxes: Deductible if paid by the owner. Home Loan Interest Deduction: Unlimited deduction on interest paid for rented-out properties under Section 24(b).
Claim directly with HMRC
For most expense claims, you will need to provide evidence to support your claim. The evidence will vary depending on the expense type you are claiming.
Section 24 of the Income Tax Act, 1961, deals with the deduction of interest on home loans. According to this section, an individual or a Hindu Undivided Family (HUF) can claim a deduction of up to Rs. 2 lakh on the interest paid on a home loan in a financial year.
Incorrect Loan Purpose: Deductions under Section 24 apply only to loans taken for the purchase, construction, repair, renewal, or reconstruction of a property. Interest on personal loans or loans for land purchase without construction does not qualify.
Your standard deduction amount usually depends on your tax filing status. For example, people who are married and filing jointly get a bigger deduction than single filers. Those 65 and older or blind are also eligible for an additional standard deduction.
Recent tax legislation, notably the "One Big Beautiful Bill Act" (OBBBA) in 2025, made significant changes, permanently setting the mortgage interest deduction (MID) limit at $750,000 for new loans (with $1M for pre-2017 debt) and, starting in 2026, treating Private Mortgage Insurance (PMI) as deductible interest, phasing out for higher incomes. The bill also increased the SALT cap to $40,000 and made the higher standard deduction permanent, impacting who benefits from itemizing.